Madison — GOP lawmakers plunged ahead with a controversial $500,000 grant to a politically connected sportsmen's group even though U.S. officials had warned Gov. Scott Walker's administration that the move endangered $28 million a year in federal money, records show.

Thedecision by the Walker administration and top Republican lawmakers to quietly handle the problems with the now-canceled grant left the public, Democrats and even some Republicans in the dark. It also ended up putting state taxpayers entirely on the hook for the grant.

Also Wednesday, the United Sportsmen of Wisconsin Inc. reacted to a Tuesday report in the Journal Sentinel by apologizing for making yet another misrepresentation of its tax status. The conservative group said it had hired a new attorney in an attempt to sort out its botched accounting and apparent failures to comply with state and federal law.

The U.S. Fish and Wildlife Service sent two sharply worded letters to the state Department of Natural Resources after lawmakers on the budget committee hastily slipped the grant into the state budget. The letters said the proposal would cost the state $28 million in annual federal money because the DNR would not have adequate control of how the grant funds were used.

Lawmakers worked on the budget for more than two weeks after the state received the first letter, but didn't fix the provision to guard the federal money. Some legislators had no idea anything needed fixing because some leaders apparently kept the problem to themselves.

Sen. Luther Olsen (R-Ripon), who sits on the budget-writing Joint Finance Committee, learned of the letters from a reporter Wednesday. He said he was stunned that the administration didn't tell him about them.

"I'm relatively speechless," Olsen said.

The senator said the DNR should have told him about the letters. "I've got to believe if that would have happened, (lawmakers) would have taken care of that immediately," he said.

Dan Zekor, a former coordinator of Missouri's use of federal Sport Fish and Wildlife Restoration funds, said the action by the lawmakers was unprecedented. Zekor, now the research center chief for the Missouri Department of Conservation, received bachelor's and master's degrees in wildlife biology from the University Wisconsin-Stevens Point.

"Those federal dollars are precious," Zekor said. "I'm not aware of any instance where people thumbed their nose at the (U.S. Fish and Wildlife) Service after a warning."

Suder, who has since left the Legislature for a job with the state Public Service Commission, has close ties to United Sportsmen, which would have used his former chief of staff Luke Hilgemann as a trainer for the grant.

As details on the grant debacle emerged Wednesday, Republicans began arguing over who was to blame.

Walker spokeswoman Jocelyn Webster said that other undisclosed Republican legislators were also notified and that the administration had done its job in notifying them. Suder and Steineke did not return calls Wednesday, and it was unclear how many legislators knew about the federal letters.

"It seems a little ridiculous (some lawmakers) want to push this off on the governor. The Legislature is the one that added it," Webster said.

Webster said Olsen and other lawmakers had a duty to ask questions about the effects of the Legislature's own budget provisions.

"This is not his first rodeo," she said of Olsen, a veteran legislator. "He knows about (these federal programs). Why didn't he ask the question?"

DNR spokesman Bill Cosh said the agency is supposed to work "with the (legislative) author of the motion in confidence when asked."

"Our role is not to make policy decisions," Cosh said.

Rep. Jon Richards (D-Milwaukee), a budget committee member who voted for the grant to help sportsmen, said he was outraged that no one from the Walker administration explained the potential impact of his vote. If they had, Richards said, he would have sought to protect the federal money and would have looked more deeply into the grant.

Richards said he hoped the state Department of Justice would investigate whether any laws were broken in what he called "wrongdoing that goes beyond cronyism."

"I am so surprised that they would be careless with $28 million in federal fish and wildlife restoration funds...and all to benefit their political friends. Unbelievable," Richards said. "They wanted to keep these letters secret and keep this relationship secret instead of working in an open and transparent way."

In the final action of the day on May 29, the Joint Finance Committee approved the grant with just seven minutes of debate in a 16-0 vote on a motion by GOP lawmakers — just one routine vote among many in its weeks of grinding work on the budget. The vote raised immediate concerns at the DNR, according to emails released Wednesday.

As envisioned by lawmakers, the grant would have given a group $225,000 in federal money and $275,000 in state money to promote hunting and fishing. The criteria were written so narrowly by Suder and Rep. Dan LeMahieu (R-Cascade) that only one group applied — United Sportsmen, a relatively new entity with close ties to Republicans.

Walker used his vast partial veto powers to rewrite the measure so that only state money was used for the grant.

That avoided any loss in federal aid, but it also meant that state taxpayers were going to have to pay for the entire grant. A federal official said Wednesday that if the state officials at the DNR had put forward a similar proposal themselves and worked with federal officials to better document its goals and methods, the state potentially could have used the federal money. That would have saved state taxpayers $225,000 on the grant over two years.

"The activities that were at least identified in the motion are potentially eligible if the (Wisconsin) Department of Natural Resources had followed procedures in federal law," said James Hodgson, a chief of wildlife and sport fish restoration programs for the U.S. Fish and Wildlife Service.

Walker's veto also locked in place the likelihood the money would go to United Sportsmen, a group that has promoted the governor's agenda and endorsed him during his 2012 recall campaign.

Webster did not say whether Walker considered vetoing the provision entirely, but said he issued hispartial veto to protect "the integrity of the federal funds."

"Passage of legislation containing wording similar to motion 527 would violate (state law) and run counter to federal regulations, making Wisconsin ineligible to receive funding through the Sport Fish Restoration and Wildlife Restoration Acts," Hodgson wrote in a June 3 letter to Deputy Natural Resources Secretary Matt Moroney.

The federal programs, created decades ago by Congress through the Pittman-Robertson and Dingell-Johnson acts, use money from federal excise taxes on firearms and ammunition as well as on fishing tackle and marine gasoline sales. Because of its rich sporting heritage and abundant natural resources, Wisconsin is one of the top eight states in the country for receiving this federal money.

The funds are used to buy and maintain quality habitat for game and sport fish as well as to educate hunters and anglers and conduct research into wildlife and the threats facing it.

Wisconsin law, Hodgson went on to write, bars state fees paid by hunters and fishermen from going toward anything other than wildlife programs and running the DNR. Wisconsin and other states must comply with such laws to receive the federal wildlife aid.

The proposed grant would clearly contradict state and federal laws because the state sportsmen fees and the federal funds would not be controlled by the state DNR but instead essentially directed by the Legislature, Hodgson wrote.

The June 3 letter was sent five days after the Joint Finance Committee stuck the grant into the state budget and two days before the committee completed its work on the bill. The budget committee on June 5 slightly modified the provision, but not in a way that fixed the problem.

From there, the budget went to the Assembly and Senate, where lawmakers worked on it for two more weeks. On June 18, Hodgson sent the state a second letter, repeating unequivocally that the grant would be in violation of state and federal law.

"The final motion, if it were to become law, would create a situation in which the service could never fund the kind of grant contemplated by the final motion, without violating (state law), which would make Wisconsin ineligible to receive Wildlife and Sport Fish Restoration Act funds, which amounts to $28 million in the current federal fiscal year," Hodgson wrote.

Suder and Steineke were told of that letter, but Assembly Republicans the next day ignored the warning and passed the budget without making changes to the grant. Two days later, Senate Republicans did the same thing.

Sen. Rob Cowles (R-Allouez) said he was unaware the U.S. Fish and Wildlife Service raised concerns about the grant before the Legislature passed the budget. He expressed outrage that his fellow lawmakers and Walker didn't halt the budget measure as soon as they learned of the issue.

"I was very pleased that (Walker) did cancel this the other day, but it's too bad they didn't see the wisdom of canceling it back then" when the DNR heard from the federal government, Cowles said.

The proposal never would have gone forward if the concerns of the federal government were widely known, he said.

About Patrick Marley

Patrick Marley covers state government and state politics. He is the author, with Journal Sentinel reporter Jason Stein, of "More Than They Bargained For: Scott Walker, Unions and the Fight for Wisconsin.”

About Jason Stein

Jason Stein covers the state Capitol and is the author with his colleague Patrick Marley of "More than They Bargained For: Scott Walker, Unions and the Fight for Wisconsin." His work has been recognized by journalism groups such as the American Society of News Editors, the Society of American Business Editors and Writers, and the Association of Capitol Reporters and Editors.